Uniqlo . . . interesting economic concept, so-so experience

As I've stated, I read many articles, magazines, and books while on my trip to Taiwan and Japan.  In the March 26, 2012, edition of The New Yorker, James Surowiecki wrote about the Japanese clothing store Uniqlo.  More interesting than merely discussing its line of clothing, its particular market, or its general success, he discussed it from an economic viewpoint (because, well, finances get him excited), and he discussed how the chain has improved its financial success by hiring more workers.  Yes, that's right.  In contrast to many American stores, Uniqlo has increased its labor costs by paying its employees more, having more full-time, long-term employees, and having more employees, in general.  Surowiecki was also highlighting Zeynep Ton's recent Harvard Business Review article that described his study on four low-price retailers (Costco, Trader Joe's, QuikTrip, and a Spanish company).  Those stores, like Uniqlo, all have higher than average labor costs, but they remain efficient and in business because they are able to keep people coming in their stores.  Ton essentially recognized that there is a point where cutting labor costs begins cutting against customers coming to your store because they can't find anything.  The term "phantom stock-out" was given to the issue when a store has an item, but the consumer can't find it, so the consumer assumes the store doesn't have it.  Another related term is "customer outsource" -- when the store begins making the customer do the work (think of self-service lanes at a grocery store).  At some point, the customer just gives up.  Suroweicki then gave the perfect example of Home Depot, where the labor costs were cut by reducing the number of employees and firing all the knowledgeable employees.  Thus, consumers were left wandering the many aisles looking for things.  Eventually, they stopped going to the stores.  I know I've personally experienced that very issue at Home Depot, and it is for that reason that I often do not patron Home Depot.

So, armed with this knowledge and knowing that I was imminently headed to Japan, I made a plan to visit a Uniqlo, if I happened to stumble on one.  Sure enough, there's a Uniqlo on Ginza, and so, despite the throngs of people we could see in the store, I persuaded my sister-in-law to accompany me to the store.  Now, I realize that it was Golden Week, and I realize we were in one of the few affordable stores on Ginza, but it was packed.  In fact, we had to wait in lines to go up the escalators.  Thus, some of the employees were being used essentially as crowd-control bouncers.  Then, once we got to the various floors, we noticed the clothing essentially offered a line of clothing reminiscent of Land's End mixed with Gap.  We weren't that impressed.  Some of the shirts had Barbie and Hello Kitty themes, but other than those, there was nothing exceptional.  The second sentence of Suroweicki's article stated, "[Uniqlo] has found a way to sell basic stuff that is not only affordable by also stylish and durable."  Yep.  We agree -- basic and durable.  Suroweicki wrote that it was the incredible labor force that made Uniqlo one of the most successful retailers in the world --- possible, but I have to say things were so hectic that we didn't really get to experience any fantastic service.  Overall, I think the idea that is so alluring is that the customer is being given top-class service even when buying low/medium-class stuff.  Everyone likes to be treated like a winner, and if a company can balance its costs just right, it seems it, too, can win.  Home Depot, take note.


p.s.  here's Uniqlo's website
p.p.s.  here's its corporate page